Understanding the VA Streamline Refinance

Understanding the VA Streamline Refinance

The VA Streamline Refinance (or IRRRL) loan is the VA’s simplest loan to use. It’s available to those who already have a VA loan and want to refinance it for a lower interest rate and lower monthly payments. It’s fast and easy to use because you can qualify:

With no verification of income or bank account information

Using paperwork from your home purchase or previous refinance

Even if you have a poor credit score

A VA Streamline Refinance can cost you very little. This type of loan has a lower funding fee than regular VA loans. Plus, the funding fee and other closing costs can be added to the loan amount.

Top Reasons to Use a VA Streamline Refinance

The top reason to get a VA Streamline Refinance is that it can save you money with a lower interest rate. Besides that:

It doesn’t require a home appraisal

There are no loan-to-value limits (“underwater” homes can be eligible)

You can close on the loan within 10 days sometimes

You may be able to skip a month or two of mortgage payments while your loan is closing

You might not pay any out-of-pocket expenses

You can lower the number of years for repayment, saving you interest in the long-term

You can switch from an Adjustable Rate Mortgage (ARM) to a Fixed Rate

You can switch from a Fixed Rate to a Hybrid ARM to lower your payments

You’ll skip the usual underwriting process

Your lender won’t call your employer

Understanding the Rules

The rules are different for a VA Streamline Refinance loan. Here are a few rules that stand out:

No Certificate of Eligibility (COE) is required

The loan must give you a tangible benefit, such as a lower monthly payment

You can’t currently be more than a month late on your existing mortgage or have more than one such late payment in the last year

You can’t get cash out

A Streamline has a funding fee of 0.5%

If you have a second mortgage, your mortgage holder has to subordinate it to the Streamline loan